We have revised up our forecast for 2018-19 growth to 7.4 percent from 7.3 percent in March. However, higher financing costs (stemming from monetary tightening and higher market premiums) and rising oil prices should limit the upside to growth, Fitch said in its Global Economic Outlook.

The economy grew at 6.7 percent in 2017-18 and 7.7 percent in January-March quarter.

Fitch said the Indian rupee has been one of the worst performing currencies in Asia this year, although the depreciation was more muted than during the 2013 taper-tantrum episode.

India has better macroeconomic fundamentals than in 2013 and very low foreign ownership rates in the domestic government bond market, but the current account deficit has been widening as a result of rising oil prices, reviving domestic demand and poor manufacturing export performance, it said.

Global trade tensions have risen significantly this year, but at this stage the scale of tariffs imposed remains too small to materially affect the global growth outlook.

"A major escalation that entailed blanket across-the-board geographical tariffs on all trade flows between several major countries would be much more damaging," says Brian Coulton, Fitch's Chief Economist.